British bank TSB to cut jobs and close branches

TSB, the British lender owned by Spain’s Sabadell will cut jobs and close branches to improve its efficiency, the CEO of the Spanish bank told a press conference today after TSB set aside restructuring costs of £29m.

Banks in Britain – including rivals Barclays and Lloyds – have ratcheted up cost-cutting in recent months in the face of tough economic conditions and higher interest rates, despite a period of robust profits for the industry.

TSB’s restructuring costs set aside in 2023 results published today include £24.4m estimated employee severance costs, the bulk of which will fall this year, the bank said in its annual report.

Asked whether that would involve a reduction in staff and branches, Sabadell CEO Cesar Gonzalez-Bueno told reporters: “Yes, it will include both.”

TSB declined to comment on where the cuts would fall.

TSB reported a 71% annual rise in net profit in 2023 to £175m and finished last year with an efficiency ratio of 73.6%, down from 78.5% in 2022, but still above its peers in the UK.

Gonzalez-Bueno said details on planned cuts would be announced by TSB in due course, but the aim was to bring the efficiency ratio – which measures a bank’s cost-to-income – down towards 60%.

A lower efficiency ratio indicates that a company is better at generating revenue while keeping expenses low.

At the end of 2023, TSB had 5,426 employees, down from 5,482 in 2022, while it reduced by nine the number of branches to 211.

Sabadell’s £1.7 billion acquisition of TSB in 2015 ran into issues almost six years ago when IT glitches sent costs spiralling.

The Spanish bank, which today reported a 2023 record net profit of €1.33 billion, froze previous plans to sell TSB until it turns around the business.

Asked today if reducing costs would be part of the Spanish bank’s plans to eventually sell TSB, Gonzalez-Bueno said: “We are not getting it ready for sale, we like our perimeter.”